CME - Embedded Expectations Analysis - 2019 08 09
CME Group Inc. (CME:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Assets, with a 51.3x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management has concerns about contract volume and their NEX acquisition.Specifically, management may be concerned about the progress they have made towards integrating their NEX acquisition, and they may lack confidence in their ability to improve run rates. Furthermore, they may be concerned about their ability to manage expenses and to sustain recent improvements in returns on cash balances. Moreover, they may have concerns about the upcoming adjustment to noncash collateral, and they may lack confidence in their ability to continue growing their customer base in the Henry Hub futures market. Finally, they may be concerned about the sustainability of 2-year note futures volume increases, and they may lack confidence in their ability to sustain recent growth in their gasoline and natural gas business.
CME Group is a holding company. Through its subsidiaries, the company exchanges provides a range of global benchmark products across asset classes based on interest rates, equity indexes, foreign exchange (FX), agricultural, energy and metal commodities. The company provides futures and options on futures trading across asset classes through its subsidiary, Chicago Mercantile Exchange Inc. (CME) Globex platform, cash and repo fixed income trading via BrokerTec, and cash and OTC FX trading via EBS. In addition, the company operates central counterparty clearing providers, CME Clearing, a division of CME. The company also provides optimization, reconciliation and processing services through TriOptima, Traiana and Reset.
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